Wisconsin Fair Dealership Case Law Update: Kaeser Compressors, Inc. v. Compressor & Pump Repair Services, Inc.

Axley Brynelson’s Distribution and Franchise Team publishes the Wisconsin Fair Dealership Case Law Update as an online resource for developments in the Wisconsin Fair Dealership Law.

Kaeser Compressors, Inc. v. Compressor & Pump Repair Services, Inc. 
United States District Court for the Eastern District of Wisconsin, September 18, 2009 

Facts: The plaintiff, Kaeser Compressors, Inc., brought this declaratory judgment action seeking a declaration that it may terminate its dealership relationship with defendant Compressor & Pump Repair Services, Inc. (CPR) without compensation. It asked the Court to declare, in the alternative, that CPR’s failure to sign a new dealership agreement constituted good cause for termination under the Wisconsin Fair Dealership Law.

In 2009, CPR found out that Kaeser had begun selling its products directly through a Sears store and the Sears website. Kaeser informed CPR and other dealers that it would be selling its products direct through its own website. After a meeting, Kaeser told CPR it would have to sign a new distributor agreement within 20 days that would eliminate CPR’s exclusivity. The agreement contained other conditions to which CPR objected. After CPR refused to sign the agreement, Kaeser brought this declaratory action. CPR alleged in its counterclaims that the actions described violated the Wisconsin Fair Dealership Law because they amounted to a constructive termination without adequate notice. It further alleged that Kaeser violated the Wisconsin Fair Dealership Law by changing the competitive circumstances of the dealership without good cause.

Ruling: The Court found that Kaeser’s action to dismiss CPR’s fair dealership claim must be denied because CPR had alleged facts and circumstances that could give rise to a finding that it had an exclusive territory, which Kaeser intended to terminate. As to CPR’s allegation that Kaeser did not have good cause to change the competitive circumstances of the dealership, the Court found that CPR allegations, if true, would establish there was no good cause. Thus the Court denied Kaeser’s motion.

Bottom Line: This case does not broker any new law; however, it is an example of the difficulties that a manufacturer and a dealer face when a manufacturer attempts to change a distributor scheme that previously existed.

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